In response to questions from Irish Travel Trade News, the Commission for Aviation Regulation has said: “The experience of the Commission is that in many cases, but not all, the existing bonds required of Travel Agents and Tour Operators are adequate to cover customer claims in the event of a collapse. The Commission is currently assessing if the bonding levels remain appropriate and will be consulting on this matter… The Commission is assessing the adequacy of the current consumer protection scheme to continue to meet the objective of ensuring consumers are protected in the event of future collapses. This assessment will include examining if there is a need to seek contributions to the Travellers’ Protection Fund in the future.”
ITTN: Why was the Irish division of Lowcostholidays only bonded for €79,243?
“The size of the bond that is required to get a licence is calculated in accordance with the Tour Operators and Travel Agents (Bonding) Regulations, 1983, S.I. 102 of 1983. The bond levels are:
(i) in the case of a tour operator, a sum of 10% of projected licensable turnover
(ii) in the case of a travel agent, a sum of 4% of projected licensable turnover.”
ITTN responds: The above is well known to everyone in the travel trade. Lowcostholidays Spain S.L., which traded as Lowcostholidays.ie, did not hold a Tour Operator’s licence but held Travel Agent licence 0730, which was renewed from 1st November 2015 with an expiry date of 31st October 2016 and with a bond level of €79,243. The projected licensable turnover for 2015/16 given by the company, and accepted by the Commission for Aviation Regulation, would therefore have been €1,981,075.
In March 2014, the Lowcosttravelgroup (which included Lowcostholidays and Lowcostbeds) had reported that: “Going global means our ambition of delivering over €1 billion in sales within two years is now a tangible goal.” In May 2015, the Group reported a turnover of €643 million for 2013/14 and said that: “Sales are currently on track for €800+ million of accommodation sales for 2014/15.” However, no separate figures for Lowcostholidays.ie were given.
The Lowcosttravelgroup ceased to trade on 15th July 2016. Almost 4,200 Irish customers of Lowcostholidays made claims to the Commission amounting to €3.8 million, an average claim of €905 – whereas the €79,243 bond provided an average of only €18.88 for 4,200 customers.
ITTN: Why has no update on the claims made to CAR been published on the CAR website?
“As part of the claims process, the Commission provided regular updates (on its website) on the total number of claims and what stage the Commission was at in reviewing all claims.”
ITTN responds: As far as ITTN is aware, these updates never stated that the bond level was only €79,243 – and therefore that a huge call of up to €3.8 million would need to be made on the €5 million Travellers’ Protection Fund.
ITTN: What action(s) are now being proposed to replenish the Travellers’ Protection Fund?
“The decision to seek contributions to finance the Travellers’ Protection Fund (suspended since 1987) does not rest with the Commission alone. Previously, the Fund was funded by contributions from tour operators only. Both the Department of Transport, Tourism and Sport and the Department of Public Expenditure and Reform have a statutory role. No decision has been made on this issue. The Commission is assessing the adequacy of the current consumer protection scheme (individual bonds plus the Travellers’ Protection Fund) to continue to meet the objective of ensuring consumers are protected in the event of future collapses. This assessment will include examining if there is a need to seek contributions to the Travellers’ Protection Fund in the future. The Commission will consult with industry before arriving at a final position.”
ITTN: Has CAR asked the Department of Transport to change the legislation regarding bonding and, if so, what has been the Department’s response?
“The experience of the Commission is that in many cases, but not all, the existing bonds required of Travel Agents and Tour Operators are adequate to cover customer claims in the event of a collapse. The Commission is currently assessing if the bonding levels remain appropriate and will be consulting on this matter. We will be examining the adequacy of existing legislation as part of our consultation and, at the end of this process, will be in a position (if required) to engage with the Department.”
ITTN: Has the bonding level of any other company licensed by CAR been revised in response to the Lowcostholidays.ie outcome?
“In the meantime, the present rules (see answer to question 1) continue to apply.”